EU ready to hit US with €10.2bn tariffs in row over Boeing aid

EU ready to hit US with €10.2bn tariffs in row over Boeing aid

Trade

EU Trade Commissioner Cecilia Malmstroem

The European Union is considering hitting US goods ranging from handbags to helicopters with retaliatory tariffs to the tune of €10.2bn in a dispute over subsidies to Boeing, according to a draft list seen by Bloomberg News.

The plan follows a US threat to seek $11bn (€9.73bn) in damages through duties on European goods ranging from helicopters to cheeses to counter state aid to Airbus. Both moves stem from parallel, 14-year-old, disputes at the World Trade Organisation over market-distorting support for aircraft makers.

The European Commission, the EU’s executive arm, outlined its retaliation plan to trade experts from the bloc’s national governments on Friday in Brussels, said a source.

Another meeting on the matter is scheduled for April 15. The WTO will ultimately determine the amounts of damages that both sides would be allowed to claim in the two cases.

On April 9, the commission dubbed the US projection of $11bn “greatly exaggerated.”

The renewed transatlantic wrangling over aviation subsidies heightens EU-US trade tensions prompted by US President Donald Trump’s “America First” protectionism, especially his controversial duties on foreign steel and aluminium based on national-security grounds and his threat to apply automotive levies on the same basis.

An escalation of transatlantic commercial tensions would in turn add risks to a global economy already suffering from Trump’s bigger trade war with China. In a Twitter post on April 10, Trump called the EU “a brutal trading partner.”

So far, the EU has applied tit-for-tat tariffs on €2.8bn of American goods in response to Trump’s metal duties and threatened to hit a further €20bn of US products with levies should Washington restrict automotive imports.

To counter the threat of US duties on foreign cars and auto parts, commission President Jean-Claude Juncker reached a truce with Trump last July in which both sides pledged to work toward scaling back transatlantic market barriers including tariffs on industrial goods.

EU governments advanced that plan on April 11 when their ambassadors to the bloc gave the go-ahead for European trade chief Cecilia Malmstrom to negotiate cuts in industrial tariffs. The envoys also approved a mandate for her to seek deeper EU-US regulatory cooperation.

The list of US goods on the commission’s draft retaliation list in the Boeing-aid case also includes video-game consoles, fitness equipment, casino game tables, tobacco, vodka, orange juice and a range of foods including chocolate, ketchup and frozen lobster. The EU imports of the listed goods have a total value of around €20bn and the bloc would eventually apply duties on some or all of the products once the WTO sets the damages limit.